Ariel Investments, an investment management company, released its “Ariel Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2025, the majority of the main U.S. indices saw a decline. Even though Wall Street is tense and markets are still volatile, the firm is taking advantage of the turbulence by carefully purchasing the undervalued stock of quality companies whose value should be realized over the long term. Against this backdrop, Ariel Fund returned -8.00% in the quarter, lagging both the Russell 2500 Value and Russell 2000 Value indices, which returned -5.83% and -7.74%. For more information on the fund’s top picks in 2025, please check its top five holdings.
In its first-quarter 2025 investor letter, Ariel Fund highlighted stocks such as Leslie’s, Inc. (NASDAQ:LESL). Leslie’s, Inc. (NASDAQ:LESL) is a direct-to-consumer pool and spa care brand. The one-month return of Leslie’s, Inc. (NASDAQ:LESL) was -29.57%, and its shares lost 85.53% of their value over the last 52 weeks. On April 22, 2025, Leslie’s, Inc. (NASDAQ:LESL) stock closed at $0.615 per share with a market capitalization of $113.93 million.
Ariel Fund stated the following regarding Leslie’s, Inc. (NASDAQ:LESL) in its Q1 2025 investor letter:
“By comparison, U.S. direct-to-consumer pool and spa care services company, Leslie’s, Inc. (NASDAQ:LESL), detracted from performance this quarter on mixed earnings results. Green shoots began to emerge on the top-line as positive sales were offset by increased spend on the transformation strategy. The new executive leadership team is reevaluating pricing, optimizing inventory and implementing customer loyalty programs. Although investors remain on the sidelines, we believe early progress on these initiatives will yield efficiency improvements. While we have been deeply disappointed with this investment, we are optimistic the new efforts will positively impact the business and position the company for long-term success. In our view, LESL’s current valuation reflects extreme pessimism, which is unwarranted given the company’s loyal client base, vertically integrated supply chain, scale advantage and seamless customer experience.”
A close-up of a pool with freshly applied chemicals, showing the efficacy of the company’s products.
Leslie’s, Inc. (NASDAQ:LESL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. Our database shows that 29 hedge fund portfolios held Leslie’s, Inc. (NASDAQ:LESL) at the end of the fourth quarter, compared to 25 in the third quarter. While we acknowledge the potential of Leslie’s, Inc. (NASDAQ:LESL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we covered Leslie’s, Inc. (NASDAQ:LESL) and shared the list of best seasonal stocks to buy according to hedge funds. Leslie’s, Inc. (NASDAQ:LESL) detracted from Ariel Fund’s performance last quarter due to disappointing financial and operating results. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.